A STUDY ON THE SHORT TERM LENDING TO ENTREPRENEURS BY THE KERALA FINANCIAL CORPORATION IN THE FIRST TWO YEARS OF 12 TH FIVE YEAR PLAN PERIOD
|
|
- Madlyn Tiffany Campbell
- 5 years ago
- Views:
Transcription
1 A STUDY ON THE SHORT TERM LENDING TO ENTREPRENEURS BY THE KERALA FINANCIAL CORPORATION IN THE FIRST TWO YEARS OF 12 TH FIVE YEAR PLAN PERIOD Poulin Kuriakose Valayil 1, Dr. G. Chandramohan 2 1 Student, 2 Director, CET School of Management, College of Engineering Trivandrum ABSTRACT The purpose of this study is to analyse the credit appraisal methodology adopted at Kerala Financial Corporation with special reference to the method adopted while providing working capital assistance. A detailed analysis is carried out of the steps followed by the Corporation while granting working capital loans to two units, one each from manufacturing and service sectors under two different schemes available out of the many schemes available at KFC for meeting the working capital needs of a unit. The findings of this paper show that the different financial parameters and their benchmark values which are required to determine the creditworthiness of borrowers especially of those availing working capital loans depends on the type of the sector of the economy to which it belongs. The credit appraisal method followed by any financial institution can thus be modified to suit the sector of functioning. The study contributes to the literature that the nature of the business influences the working capital requirement and management policies of any firm. Keywords: Credit Appraisal Methodology, Working Capital, Sectors of Economy, Financial Parameters and Benchmark Values. I. INTRODUCTION SMEs are one of the major contributors to the socio-economic development of a nation being major sources of employment and export opportunities. SMEs provide large employment opportunities at comparatively lower cost of capital than large industries and also contribute to the industrialization of rural areas. The SME sector in India consisting of 36 million units producing more than 6000 products ranging from traditional to high-tech items, provides employment to over 80 million persons. The sector contributes about 8% to GDP, 45% to the total manufacturing output and 40% to the exports from the country (SME Chamber of India, 2014) [7]. Adequate and timely financing of SMEs is one of the critical factors which will help achieve the potential of SMEs of being a major partner in the process of inclusive growth through their innovative approaches in their operations Introduction to the Industry The Industrial Finance Corporation of India (IFCI) was established by the government as the first Development 163 P a g e
2 Financial Institution in the country, on July 1, 1948 with the objective to cater to the long-term finance needs of the industrial sector at the time of independence when India's capital market was relatively under-developed due to dearth of merchant bankers and underwriting firms and commercial banks not being equipped to provide longterm industrial finance in any significant manner. The DFI was provided access to low-cost funds through the RBI s Statutory Liquidity Ratio or SLR which enabled it to provide loans and advances to corporate borrowers at concessional rates. Following the liberalization in the early 1990s, the constitution of IFCI was changed in 1993 from a statutory corporation to a company under the Indian Companies Act, 1956 to meet the need to respond to the changing financial system with greater flexibility. IFCI could thus also directly access the capital markets for its funds needs. Following the establishment of the IFCI in the year 1948, the State Governments expressed their desire to set up similar Corporations in States to supplement the work of the Industrial Finance Corporation by confining their activities to financing medium and small scale industries at the State-level and which are outside the scope of the Industrial Finance Corporation. The State Corporations were thus established under a special Statute, the State Financial Corporations Act, The SFCs provide assistance in the form of term loans, by underwriting issues of shares and debentures, by subscribing to debentures, and by standing guarantee for loans raised by the client from other institutions and from the general public. The SFCs thus serve the multiple national objectives of rapid industrial growth, balanced regional development, self-reliance, employment generation, and equitable distribution of income and means of production (Verma, 2010) [9] About Kerala Financial Corporation Kerala Financial Corporation (KFC) incorporated under the State Financial Corporations Act of 1951, was established as the Travancore Cochin Financial Corporation on Consequent to the formation of the Kerala State in November 1956 following the reorganization of states on linguistic basis, the Travancore Cochin Financial Corporation was renamed as Kerala Financial Corporation in The functions of the Corporation are controlled and guided by the provisions of SFCs Act 1951 as amended in The main objective of KFC is the rapid industrialization of the state by extending financial assistance to Micro, Small and Medium Enterprises in manufacturing and service sector through formulation of suitable loan schemes. It provides financial assistance to the customers for setting up of new units and for the expansion / modernization / diversification of existing units in both manufacturing and service sectors, through a wide range of products and services. Apart from term loans, the Corporation also provides Working Capital finance and Short Term Finance to the needy enterprises. It has devised innovative schemes such as modernization schemes for SSIs, Special schemes for Resorts, Hospitals, TV Serial Production, etc Problem Definition The prime input for the sustained growth of small scale sector is credit. Credit required for any business is of long term and short term nature. Long term credit is needed for creation of fixed assets like land, building, plant and machinery. Short term credit is needed to meet the day to day requirement of purchasing raw material and other inputs like electricity, water, etc. and for payment of wages and salaries (Nayak, 2004) [5]. 164 P a g e
3 The major source of SME financing is external funding from commercial banks as primary lenders as against equity finance which is costly and inefficient due to the equity market of small firms not being well developed and most managers or owners lacking experience in this area. Thus any lack of efficient bank lending would deter the development of SMEs (Gama & Geraldes, 2012) [2]. Financial assistance must be provided by financial institutions to small units on easy terms and with hassle-free procedures through devising appropriate new schemes and implementing them (Nayak, 2004) [5]. The risk related to non repayment of credit by the customer of a financial institution is called credit risk. Risk is inability or unwillingness of borrower to meet their repayment obligations as per the stipulated terms. Therefore in order to mitigate the credit risk, it is essential to appraise the credibility of the customer with respect to their financial condition and the ability to repay back the loan in future. This process to ascertain risks associated with the extension of the credit facility is called credit appraisal (Arora, Gaur, & Babita, 2013) [1]. In this paper, the Credit Risk Assessment Model of KFC is studied with reference to the method adopted to test the financial viability of the projects seeking working capital assistance under its various schemes. KFC offers a number of loan schemes of working capital assistance to industrial units both in the manufacturing and service sectors such as Working Capital Revolving Fund Loan (WCTL), Special Working Capital Assistance to Hotels as short term loans and Working Capital Term Loan as a long term loan. An attempt has been made to determine sector specific parameters and their benchmark values which can be utilised to carry out financial appraisal of projects applying for loans under different schemes. II. LITERATURE REVIEW Availability of working capital assistance is one of the major stimuli for improving the performance of any business. Working capital is the total amount of funds required for day to day operation of a unit. The amount of working capital required for a firm depends upon its nature of business, such as manufacturing or service, among various other factors. Determination of appropriate amount of working capital of a SME unit and its funding would contribute to the growth of the firm. Normally, manufacturing industries and trading organizations need more working capital than those in the service business organizations since a service sector unit requires minimum amount of stock of goods and also since there are less credit transactions in a service unit as compared to a manufacturing or trading firm. 2.1 Credit Appraisal Process The primary task of any lender before granting financial assistance is to identify the risk factors and mitigate them on a continuous basis such that the risks do not deter the financial institution from lending. The success factors behind any business are managerial ability, favourable business environment, favourable industrial environment and adequate financial strength. The Credit Risk Assessment models adopted by a financial institute take into account all possible factors which go into appraising the risks associated with a loan. They are categorized broadly into financial, business, industrial & management risks and are rated separately. The assessment of financial risk is carried out by appraisal of the financial strength of the borrower based on performance & financial indicators. The overall financial risk is assessed in terms of static ratios, future prospects & risk mitigation (collateral security / financial 165 P a g e
4 standing). The common parameters used to rate the management of an enterprise / group are Integrity (corporate governance), Track record, Managerial competence / commitment, Expertise, Structure & systems, Experience in the industry, Credibility: ability to meet sales projections and profit projections, Payment record, Strategic initiatives and Length of relationship with the financial institution. 2.2 Working Capital Financing Working capital refers to net working capital which is the excess of current assets over current liabilities. Current assets include cash, debtors, inventories which in the course of business can be converted into cash within a short period of normally one accounting period. Current liabilities include bank overdraft, bills payable, sundry creditors which are intended to be paid in the ordinary course of business within a short period of normally one accounting period, out of the current assets or the income of the business. The portion of the current assets not financed by current liabilities is known as working capital gap. The working capital gap would be financed either by own source or from borrowings. Thus, working capital is financed by contribution from long term sources, which is known as net working capital and bank finance (Naik, 2014) [4]. Working capital is important because lack of working capital may lead the business to technical insolvency and ultimately to liquidation. The Reserve Bank of India prescribes the norms to be used by banks for financing working capital requirements of a firm from time to time. The methods which are commonly used at the present time are Maximum Permissible Bank Finance (Methods MPBF I and II), Turnover Method and Cash Budget Method (Naik, 2014) [4]. According to Moyer et al., 2003 (Moyer, McGuigan, Rao, & Kretlow, 2003) [3], there is no single optimal working capital policy which can be applied on all firms because the presence of industry or sector specific characteristics have an impact on firm s decision on the level of investment in working capital (Raheman, Qayyum, Afza, & Bodla, 2010) [6]. Thus, it can be concluded that the parameters which are used to determine the credit worthiness of the firm, especially ratios, would have different benchmark values for firms of different sectors or totally different parameters can be used for evaluation purpose. III. DATA COLLECTION AND ANALYSIS The objective of research paper is to study the Credit Risk Assessment Model of KFC adopted to disburse working capital loans through study on the commercial, financial & technical viability of the projects funded in the years 2012 and The industrial units studied were M/s. ABC Wood Industries, a wood manufacturing and processing unit from the manufacturing sector and M/s. Hotel DEF from the service sector. M/s. ABC Wood Industries was granted a working capital loan of Rs lakhs in the month of August, 2013 under the Working Capital Revolving Fund Loan scheme. M/s. Hotel DEF was granted a working capital loan of Rs. 50 lakhs in the month of February, 2012 under the Special Working Capital Assistance to Hotels scheme. 3.1 Principles of Lending and Loan Policy of KFC The basic business objective of the Corporation, as stated in the Loan Policy document of KFC, is term lending to industries, to support sustained industrial growth in the State with special attention to the MSME sector. The policy document which is reviewed annually is used by credit dispensing functions to create a good loan 166 P a g e
5 portfolio. The policy provides explicit guidelines to the concerned in the areas of project acceptance, appraisals and loan sanctioning. One of the major business lines of the Corporation is providing working capital loans. The sectors eligible for Corporation s support include among many others, the manufacturing sector which includes under its purview all manufacturing activities including processing and preservation; and hospitality sector (a kind of service sector) like hotels, lodges, restaurants, convention centre / seminar halls, tourist resorts, amusement parks, etc., as the need for this sector is being increasingly felt as a promotional support for state industrial / business growth. Simplified processes, quick credit decision and timely credit delivery is the thrust area of the Corporation for the benefit of the MSME customers. KFC utilises agency services of CRISIL for credit rating. The Basel II regulatory framework for the banking sector aligns regulations with best practices for credit risk management and provides banks with an incentive to invest in more sophisticated risk measurement and management capabilities. It consists of three pillars: minimum capital requirements (credit risk, operational risk, and market risk), supervisory review process, and market discipline (Gama & Geraldes, 2012) [2]. An internal rating format has been developed for sanction and subsequent credit rating in respect of all cases. The credit rating is carried out on annual basis for all loans in respect of existing/new clients and they should obtain a score of 70 and above in the new credit rating continuum. The account with internal credit rating of 70 would be in the standard category and will be eligible for 0.5% reduction in interest rate. The benchmark financial norms included in the appraisal note at the time of sanction of the units studied were:- DER (For the company as a whole, including proposed assistance) 2:1, with the extent of relaxation permissible up to 3:1 for Micro and small enterprises and 2.5:1 for Medium enterprises/service Sector Enterprises. Projected DSCR 2:1, with the extent of relaxation permissible up to 1.5:1. Promoter's contribution 25%, with the extent of relaxation permissible up to 20%. Debt ratio for the company (Total debt / Total Asset (capital employed)) 2:3. Current ratio 2:1 Quick ratio 1:1 Inventory Turnover Ratio 2 months or 6 times The analysis is carried out based on audited financials of the latest financial year. The Sanctioning Authority takes a holistic view of the proposal and permits relaxation to the extent permitted as given in the Loan policy document in one or more benchmark norms after considering aspects like risk perception, linkages and benefits accruing to the MSME sector arising out of the Corporation's assistance. The workflow for sanction and disbursement process followed at KFC is as follows:- 167 P a g e
6 Figure 1: Workflow for Sanction and Disbursement Process at KFC 3.2 Working Capital Revolving Fund Loan To M/s. ABC Wood Industries A revolving fund is a fund or account that remains available to finance an organization's continuing operations without any fiscal year limitation, because the organization replenishes the fund by repaying money used from the account. This fund is used to provide loans for specified purposes that are repaid to the fund with interest. The income earned from the interest charged for the loans is accumulated in the fund until it is sufficient to pay back the original loan. The loan is returned to the project and can then be used to start another fund somewhere else. Meanwhile the original fund still has capital from the loan repayments and continues to grow as a result of the interest payments. M/s. ABC Wood Industries is an industrial unit which carries out manufacturing of wooden furniture, seasoning of woods, etc. The loan application was for Rs. 400 lakhs under the Working Capital Revolving Fund Loan scheme for the purpose of expansion of existing unit by stocking wood. The financial appraisal of the proposal showed that the unit s total working capital requirement by the traditional method was Rs. 530 lakhs. The analysis of the financial statements of the latest financial year gave the following results:- Debt ratio = 0.04 Current ratio = Quick ratio = Inventory Turnover Ratio = times The unit was granted a working capital loan of Rs. 360 lakhs. 168 P a g e
7 3.3 Special Working Capital Assistance to M/s. Hotel DEF M/s. Hotel DEF is a unit which carries out Tourism related activities with attached Bar Hotel. The loan application was for Rs. 50 lakhs under the scheme of Special working capital assistance to hotels for the purpose of renewal of bar license and for meeting short term working capital requirements of the succeeding financial year. The analysis of the financial statements of the latest financial year gave the following results:- Debt ratio = Current ratio = 9.27 Quick ratio = 5.79 Inventory Turnover Ratio = times The unit was granted a working capital loan of Rs. 50 lakhs. IV. RESULTS AND DISCUSSION a. The credit rating is done only once a year at KFC. Therefore, the rating does not take into account short term drastic changes like price level changes (which are an issue with any method based on accounting statements, since annual reports are based on historical cost basis of accounting and other changes like sudden mishap/ of the counterparty are not readily accounted for by the rating system due to long lag between repeat ratings on the same account. b. The present rating model does not prioritize among the sectors of the economy. The same financial parameters and benchmark values are used to determine the eligibility of a project seeking working capital assistance, irrespective of the sector to which the unit belongs. This is important to be considered since working capital management techniques of firms vary according to the nature of the business carried out. c. Since manufacturing units are distinguished with their high levels of stock raw materials, work in progress and finished goods; huge amount of capital to meet their fixed assets as well as operational requirements; many units follow aggressive strategy of financing with short term loans for financing both short term and long term requirements. d. Hence, the values of ratios such as current ratio and quick ratio for a manufacturing unit are high as compared to the values of these ratios for a unit functioning under the service sector which is characterized by high inventory turnover ratio and conservative strategy of financing the capital requirements of the firm for both long term as well as working capital needs of the firm. e. Thus, apart from setting benchmark values for the crucial financial parameters which are assessed, the amount of relaxation which can be allowed in case of units belonging to each sector can be devised accordingly to help in easy assessment and understanding of the relaxation norms to be followed for testing the financial credibility of the applicant firm. V. CONCLUSION A banker s philosophy in lending can be summarized in triple components purpose, repayment ability and structure. First, the purpose of the loan must be legal, ethical and within the bank s policy. Second, the loan can be repaid from cash flow, collateral and guarantees. Third, the loan can be structured so that is repaid on time, in 169 P a g e
8 full and as agreed. Of the trinities, the most important component to the banker is the repayment ability, thereby making it important to evaluate the cash flow from operations, which leads to critical evaluation of the working capital assets and liabilities of the firm (Strischek, 2001) [8]. From the study, it can be concluded that methods used to analyze the eligibility of units seeking loans must be modified to suit the nature of the business the unit caters to, especially while testing the eligibility for granting working capital assistance. This would help in getting consistent results from the operations of the unit funded in the successive years, promising it a bright future which in time would lead to contribution to the progress of the nation. REFERENCES [1] Arora, N., Gaur, D. A., & Babita, M. (2013). CREDIT APPRAISAL PROCESS OF SBI: A CASE STUDY OF BRANCH OF SBI IN HISAR. Arth Prabhand: A Journal of Economics and Management, 2 (1), [2] Gama, A. P., & Geraldes, H. S. (2012). Credit risk assessment and the impact of the New Basel Capital Accord on small and medium sized enterprises: An empirical analysis. Management Research Review, 35 (8), [3] Moyer, R. C., McGuigan, J. R., Rao, R. P., & Kretlow, W. J. (2003). Contemporary Financial Management. United States of America: Thomson Press. [4] Naik, S. (2014, July 20). Banking School. Retrieved June 30, 2015, from BANKINGSCHOOL.CO.IN: [5] Nayak, D. P. (2004, October 9-10). Role of Financial Institutions in Promoting Entrepreneurship in Small Scale Sector in Assam. Silchar, Assam, India. [6] Raheman, A., Qayyum, D. A., Afza, D. T., & Bodla, D. M. (2010). Sector-wise Analysis of Working capital Management and Firm Performance in Manufacturing Sector of Pakistan. INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS, 2 (7), [7] SME Chamber of India, w. (2014, November 19). SME Chamber of India. Retrieved June 30, 2015, from SME Chamber of India Web site: [8] Strischek, D. (2001). A banker's perspective on working capital and cash flow management. Strategic Finance, 83 (4), [9] Verma, S. R. (2010). Performance of Haryana Financial Corporation in Liberalized Era. The IUP Journal of Managerial Economics, VIII (1 & 2), P a g e
DETERMINANTS OF COMMERCIAL BANKS LENDING: EVIDENCE FROM INDIAN COMMERCIAL BANKS Rishika Bhojwani Lecturer at Merit Ambition Classes Mumbai, India
DETERMINANTS OF COMMERCIAL BANKS LENDING: EVIDENCE FROM INDIAN COMMERCIAL BANKS Rishika Bhojwani Lecturer at Merit Ambition Classes Mumbai, India ABSTRACT: - This study investigated the determinants of
More informationFinancing Energy Efficiency Projects for SMEs
Financing Energy Efficiency Projects for SMEs UNEP Workshop: Corporate Social Responsibility & Sustainable reporting Mumbai, Tuesday the 5 th December 2006 1 SMEs In India Industries with investment upto
More informationAnalysis of Consumer Perception on Credit Appraisal Process: An Empirical Study on HDFC Bank, Solan (H.P.)
Analysis of Consumer Perception on Credit Appraisal Process: An Empirical Study on HDFC Bank, Solan (H.P.) Anjali 1, Kajal Chaudhary 2* (Corresponding author), SurjanSingh 3, Sukhdeep Kaur 4, R.Ravi 5
More informationImpact of Lending By Money Lenders (Unorganised Sector) On Sickness of MSMEs in Uttar Pradesh
Page7 Impact of Lending By Money Lenders (Unorganised Sector) On Sickness of MSMEs in Uttar Pradesh ABSTRACT: Ali Mahdi Naqvi Research Scholar, Department of Applied Economics, Lucknow University. This
More informationWhat are Banks looking for during credit appraisal WE EMPOWER MSME
What are Banks looking for during credit appraisal 1 MSME Definition Micro Enterprise Manufacturing sector Investment in P&M Service sector Investment in equipment Upto Rs.25 lakh Upto Rs.10 lakh Small
More informationEngineering & Technology in India
=================================================================== Vol. 1:5 December 2016 =================================================================== Micro Small and Medium Enterprise Sector in
More informationCONCLUSIONS AND SUGGESTIONS
CHAPTER - VIII CONCLUSIONS AND SUGGESTIONS The main function of IDBI, as its name suggests, is to finance industrial enterprises such as manufacturing, mining, processing, shipping and other transport
More informationProject Finance & Techniques. CA Amit Godse CA Yashesh Shroff
Project Finance & Techniques CA Amit Godse CA Yashesh Shroff What is Project Finance? Project finance is the long-term financing of infrastructure and industrial projects based upon the projected cash
More informationPROFESSIONAL PROGRAMME EXAMINATION (NEW SYLLABUS) ELECTIVE PAPER BANKING LAW AND PRACTICE MODEL TEST PAPER. Time allowed: 3 hours Max Marks: 100
PROFESSIONAL PROGRAMME EXAMINATION (NEW SYLLABUS) ELECTIVE PAPER 9.1 - BANKING LAW AND PRACTICE MODEL TEST PAPER Time allowed: 3 hours Max Marks: 100 Attempt all questions. All questions are compulsory.
More informationTMB MSME CREDIT SCHEME
TMB MSME CREDIT SCHEME PARAMETERS Purpose Coverage SCHEME GUIDELINES To provide Bank Credit to MSME at liberalized terms towards working capital and term loan for acquiring fixed assets All Micro, Small
More informationDevelopment Financial Institutions
CHAPTER 10 Development Financial Institutions LEARNING OBJECTIVES: After studying the chapter you should be able to understand: overview of development financial institutions in india Role of DFis in indian
More informationPRIORITY SECTOR LENDING IN INDIAN BANKING SECTOR
PRIORITY SECTOR LENDING IN INDIAN BANKING SECTOR AKHILA IBRAHIM K. K. Research Scholar Department of Commerce and Centre of Research PSMO College, Tirurangadi. ABSTRACT The main function of banks not limited
More informationBARRIERS FACED BY MICRO, SMALL AND MEDIUM ENTERPRISES IN RAISING FINANCE
Volume 3, Issue 5 (May, 2014) Online ISSN-2277-1166 Published by: Abhinav Publication Abhinav National Monthly Refereed Journal of Research in BARRIERS FACED BY MICRO, SMALL AND MEDIUM ENTERPRISES IN RAISING
More information(DHHM/DBM/DMM/DHRM/ DFM/DIB/DIM/DBFM 01)
(DHHM/DBM/DMM/DHRM/ DFM/DIB/DIM/DBFM 01) COMMON PAPER Paper - I : Perspectives of Management Answer any Five questions from the following 1) Explain the nature and scope of management. 2) What are the
More informationJournal of Advance Management Research, ISSN:
BARRIERS FOR GETTING START UP BUSINESS LOANS - A STUDY ON MICRO SMALL AND MEDIUM SCALE ENTERPRISES IN CUDDALORE DISTRICT, INDIA. Dr. R.Rajendran*, Assistant Professor (SG), Department of Business Administration,
More informationFAIR PRACTICES CODE I) APPLICATION FOR LOANS & ADVANCES AND SCHEDULE OF CHARGES
FAIR PRACTICES CODE I) APPLICATION FOR LOANS & ADVANCES AND SCHEDULE OF CHARGES 1) The bank considers sanction of credit facilities to various types of borrowers, if such a request is received from them.
More informationPolicy on Lending to MSMEs and Rehabilitation of MSMEs
Policy on Lending to MSMEs and Rehabilitation of MSMEs 2 A) Lending to MSMEs Definition of Micro, Small and Medium Enterprises: MSME Act, 2006 enacted by the Government of India in June 2006, lays down
More information3, 1, 2017 A STUDY ON FINANCIAL PERFORMANCE OF TAMILNADU INDUSTRIAL INVESTMENT CORPORATION LIMITED
A STUDY ON FINANCIAL PERFORMANCE OF TAMILNADU INDUSTRIAL INVESTMENT CORPORATION LIMITED Dr. M. Thamaraikannan* & V. Yuvarani** * Associate Professor and Head, PG and Research Department of Commerce, Sri
More informationTHE TAMILNADU INDUSTRIAL INVESTMENT CORPORATION LIMITED CITIZENS CHARTER
THE TAMILNADU INDUSTRIAL INVESTMENT CORPORATION LIMITED 1. Introduction: CITIZENS CHARTER The Tamilnadu Industrial Investment Corporation Limited (TIIC) is a Government Company incorporated under The Companies
More informationPAPER No. 16: Financial Markets and Institutions MODULE No. 18: Bank Credit: Working Capital & Bank Funds
Subject Paper No and Title Module No and Title Module Tag 16: Financial Markets and Institutions 18: Bank Credit: Working Capital & Bank Funds Com_P16_M18 TABLE OF CONTENTS 1) Learning Outcomes 2) Introduction-
More informationFACTORS AFFECTING BANK CREDIT IN INDIA
Chapter-6 FACTORS AFFECTING BANK CREDIT IN INDIA Banks deploy credit as per their credit or loan policy. Credit policy of a bank, basically, provides a direction to the use of funds, controls the size
More informationFINANCIAL STATEMENTS ANALYSIS - AN INTRODUCTION
Financial Statements Analysis - An Introduction 27 FINANCIAL STATEMENTS ANALYSIS - AN INTRODUCTION You have already learnt about the preparation of financial statements i.e. Balance Sheet and Trading and
More informationTHE INTERNATIONAL JOURNAL OF BUSINESS & MANAGEMENT
THE INTERNATIONAL JOURNAL OF BUSINESS & MANAGEMENT Lending to Micro Small and Medium Enterprises: An Analysis of Bank Approaches and Risk Perceptions Harsha S. Talaulikar Research Scholar, Department of
More informationREGULATIONS FOR HOUSING FINANCE. REGULATION R-16 The housing finance facility shall be provided at a maximum debt-equity ratio of 85:15.
GENERAL D E F I N I T I O N S 1. Bank means a banking company as defined in the Banking Companies Ordinance, 1962. 2. Borrower means an individual to whom a bank / DFI has allowed any consumer financing
More informationSummary o. f findings, Conclusion and suggestions
Summary o. f findings, Conclusion and suggestions CHAPTER-IX SUMMARY OF FINDINGS, CONCLUSION AND SUGGESTIONS In this chapter, an attempt is made to highlight the major inferences with a view of provide
More informationKERALA FINANCIAL CORPORATION- AN OVERVIEW
KERALA FINANCIAL CORPORATION- AN OVERVIEW Simon.T.C A study on the influence of Kerala financial corporation in the industrial development of Kerala with special reference to Northern districts Thesis.
More informationANSWER KEY C F.Y.B. Com. (FINANCIAL MANAGEMENT) (CHOICE BASE) SEMESTER - I / C Indian Financial System
ANSWER KEY-00135 C0921 - F.Y.B. Com. (FINANCIAL MANAGEMENT) (CHOICE BASE) SEMESTER - I / C0584 - Indian Financial System Q1) a) Answer whether the below statements are True or False: (Attempt any 8) (8
More informationSME SMART SCORE LOAN APPLICATION FORM
SME SMART SCORE LOAN APPLICATION FORM Please fill up this form only if the answers to all the following 4 questions are YES 1. Whether the chief promoter / Chief executive is between 18 and 65 years of
More informationFREQUENTLY ASKED QUESTIONS ON FFC FOR MSME LOANS
FREQUENTLY ASKED QUESTIONS ON FFC FOR MSME LOANS 1. Question: What is Finance Facilitation Centres (FFCs)? Finance Facilitation Centre (FFCs) are dedicated online platform (www.nsicffconline.in) under
More informationQ U E S T I O N S B A S E D O N F I N A N C I A L M A N A G E M E N T
Q U E S T I O N S B A S E D O N F I N A N C I A L M A N A G E M E N T 1) The Yield to Maturity of a bond is the same as: a) The present value of the bond b) The bonds internal rate of return c) The future
More informationNon performing assets of NBFI S in India
Non performing of NBFI S in India Journal of Social Welfare and Management 103 Volume 4 Number 2, April - June 2012 S. Kamalaveni*, R. Anitha** Abstract This paper focuses on the non-performing of NBFI
More informationFREQUENTLY ASKED QUESTIONS ON BANK CREDIT FACILITATION SCHEMES FOR MSME LOANS
FREQUENTLY ASKED QUESTIONS ON BANK CREDIT FACILITATION SCHEMES FOR MSME LOANS 1. Question: What is Bank Credit Facilitation Scheme? To meet the credit requirements of MSME units NSIC has entered into a
More informationINTRODUCTION MEANING OF WORKING CAPITAL
INTRODUCTION Working capital management is also one of the important parts of the financial management. It is concerned with short-term finance of the business concern which is a closely related trade
More informationBank Financial Management
1) The Yield to Maturity of a bond is the same as: a) The present value of the bond b) The bonds internal rate of return c) The future value of the bond QUESTIONS BASED ON FINANCIAL MANAGEMENT 2) Choose
More informationBY A.R MANICKAM DEPUTY GENERAL MANAGER UNION BANK OF INDIA
TERM LOAN FINANCING 28.06.2012 BY A.R MANICKAM DEPUTY GENERAL MANAGER UNION BANK OF INDIA Term Loan A Term Loan is an advance which is granted usually against the security of the borrower s Fixed Assets
More information18th Year of Publication. A monthly publication from South Indian Bank.
To kindle interest in economic affairs... To empower the student community... Open YAccess www.sib.co.in ho2099@sib.co.in A monthly publication from South Indian Bank 18th Year of Publication SIB STUDENTS
More informationSECURITIES AND EXCHANGE COMMISSION OF PAKISTAN SPECIALIZED COMPANIES DIVISION NBFC DEPARTMENT ******* CIRCULAR NO. 1 OF 2006
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN SPECIALIZED COMPANIES DIVISION NBFC DEPARTMENT ******* SECP/NBFC(1)/(R)/2005 Islamabad, January 09, 2006 CIRCULAR NO. 1 OF 2006 PRUDENTIAL REGULATIONS FOR
More informationComparative Analysis of NPAs and Credit Deployment of Scheduled commercial Banks of India
Comparative Analysis of NPAs and Credit Deployment of Scheduled commercial Banks of India Shailja Vasisht Assistant Professor, PCTE Group of Institutes Ludhiana ABSTRACT In India, the banks are being segregated
More information8 Aims/ Objectives of the SME Banking Course
8 Aims/ Objectives of the SME Banking Course The principal objective of this course is to impart knowledge and expertise in the field of SME financing. It enables the student to understand the global perspective
More informationFinancing SME s Alternative Strategies. CAFRAL Conference on SME s - September 7 th 2012
Financing SME s Alternative Strategies CAFRAL Conference on SME s - September 7 th 2012 Table of Contents Section 1: Importance of MSME s to the economy Section 2: Market Opportunity Section 3: Industry
More informationPART II : FINANCIAL MANAGEMENT QUESTIONS
PAPER 3 : COST ACCOUNTING AND FINANCIAL MANAGEMENT PART II : FINANCIAL MANAGEMENT QUESTIONS 1. Answer the following, supporting the same with reasoning/working notes: (a) Xansa Limited s operating income
More informationRating criteria for the construction industry. February 2018
Rating criteria for the construction industry February 2018 Criteria contacts Pawan Agrawal Chief Analytical Officer CRISIL Ratings Email: pawan.agrawal@crisil.com Sameer Charania Director Rating Criteria
More informationSources of Finance of Selected Small Scale Industries in Dombivli MIDC Area of Thane District Maharashtra
Available online at : http://euroasiapub.org/current.php?title=ijrfm, pp. 23~32 Thomson Reuters ID: L-5236-2015 Sources of Finance of Selected Small Scale Industries in Dombivli MIDC Area of Thane District
More informationPerformance of Small Scale Industries in India
Performance of Small Scale Industries in India 1. Prof T.Uma Maheswara Rao, Ph.D, Professor KLU Business School, K L University,Vaddeswaram, Guntur. 2. Smt.G.Kavitha Kiran, Research Scholar, Department
More informationBasel III: Pillar III- Disclosures June 30, 2018
Abu Dhabi Commercial Bank PJSC India Branches Basel III: Pillar III- Disclosures June 30, 2018 Pillar III Disclosures Table of Contents 1 DF-1 Scope of Application and Capital Adequacy 3 2 DF-2 Capital
More informationPriority Sector Lending: Trends, Issues and Strategies
24 Priority Sector Lending: Trends, Issues and Strategies Shilpa Rani, Research Scholar, Kurukshetra University, Kurukshetra Diksha Garg, Research Scholar, Kurukshetra University, Kurukshetra ABSTRACT
More informationImproving. The Financial Ecosystem of. Indian MSMEs
Improving The Financial Ecosystem of Indian MSMEs Introduction A vibrant entrepreneurial ecosystem constitutes a failsafe route to a nation s economic development. Prime Minister Narendra Modi s Make in
More informationChapter -9 Financial Management
Chapter -9 Financial Management Business Studies (VKS) Definition Financial management is concerned with efficient acquisition and allocation of funds. In other words, financial management means estimating
More informationUNIT 3 DETERMINATION OF WORKING CAPITAL
UNIT 3 DETERMINATION OF WORKING CAPITAL Objectives The objectives of this unit are to: Provide a framework for assessing the working capital requirements of a firm. Explain the concept of operating cycle
More informationA Study on Impact of Bad Loans on Performance of Banks
IOSR Journal of Business and Management (IOSR-JBM) e-issn: 2278-487X, p-issn: 2319-7668 PP 37-41 www.iosrjournals.org A Study on Impact of Bad Loans on Performance of Banks karlapudi preethi karlapudipreethi58@gmail.com
More informationCHAPTER - VI RATIO ANALYSIS 6.3 UTILITY OF RATIO ANALYSIS 6.4 LIMITATIONS OF RATIO ANALYSIS 6.5 RATIO TABLES, CHARTS, ANALYSIS AND
CHAPTER - VI RATIO ANALYSIS 6.1 INTRODUCTION 6.2 NATURE OF RATIO 6.3 UTILITY OF RATIO ANALYSIS 6.4 LIMITATIONS OF RATIO ANALYSIS 6.5 RATIO TABLES, CHARTS, ANALYSIS AND INTERPRETATION OF DIFFERENT RATIOS
More informationChapter-VII Data Analysis and Interpretation
Chapter-VII Data Analysis and Interpretation 16 CHAPTER-VII DATA ANALYSIS AND INTERPRETATION In order to arrive at a logical and constructive analysis of micro financing by commercial banks in Rajasthan
More informationSIDBI s Schemes of Assistance
SIDBI s Schemes of Assistance TEAM SIDBI 1 SIDBI A brief Profile Constitution Set up in 1990 SIDBI Act Initially wholly owned subsidiary of IDBI Act amended in 2000 to broad based shareholding Shares held
More informationChapter 13 Financial management
Chapter 13 Financial management 1. Concept in financial management... 3 1.1. Balance sheet, asset and financing structure... 3 1.2. Capital... 3 1.3. Income... 3 1.4. Costs... 4 1.4.1. Fixed costs... 4
More informationBasel III: Pillar III- Disclosures
Abu Dhabi Commercial Bank PJSC India Branches Basel III: Pillar III- Disclosures June 30, 2017 Pillar III Disclosures Table of Contents 1 DF-1 Scope of Application and Capital Adequacy 3 2 DF-2 Capital
More informationComparative Analysis of Different Banks
Comparative Analysis of Different Vivek Srivatsva #1, Dr M L Maurya *2 Abstract The economic reforms in India started in early nineties, but their outcome is visible now. Major changes took place in the
More informationRoll No : 1 : Time allowed : 3 hours Maximum marks : 100. Total number of questions : 8 Total number of printed pages : 11
Roll No : 1 : Time allowed : 3 hours Maximum marks : 100 Total number of questions : 8 Total number of printed pages : 11 NOTE : All working notes should be shown distinctly. PART A (Answer Question No.1
More informationA Study on Trend Performance of Foreign Banks operating in India
A Study on Trend Performance of Foreign Banks operating in India M.Kirthika Assistant Professor PSGR Krishnammal for Women Coimbatore Tamil Nadu South India S.Nirmala Associate Professor PSGR Krishnammal
More informationBasel III: Pillar III- Disclosures
Abu Dhabi Commercial Bank PJSC India Branches Basel III: Pillar III- Disclosures December 31, 217 Pillar III Disclosures Table of Contents 1 DF-1 Scope of Application and Capital Adequacy 3 2 DF-2 Capital
More informationA STUDY OF FINANCIAL PERFORMANCE: A COMPARATIVE ANALYSIS OF STATE BANK OF INDIA AND ICICI BANK
A STUDY OF FINANCIAL PERFORMANCE: A COMPARATIVE ANALYSIS OF STATE BANK OF INDIA AND BANK Chahat Gupta, Assistant Professor, G.G.S. College for Women, Chandigarh, India Amandeep Kaur, Assistant Professor,
More informationIMPACT OF GROWTH OF PRIORITY SECTOR IN INDIA
IMPACT OF GROWTH OF PRIORITY SECTOR IN INDIA S.Felix Sophia, Ph.D. Research Scholar, Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli-24 INTRODUCTION Priority Sector
More informationTHE SOCIAL RESPONSIBILITY OF BANKS AND OTHER FINANCIAL INSTITUTIONS TOWARDS SMALL BUSINESSES
THE SOCIAL RESPONSIBILITY OF BANKS AND OTHER FINANCIAL INSTITUTIONS TOWARDS SMALL BUSINESSES By Dr Francis Neshamba Senior Lecturer in Enterprise Development Africa Centre for Entrepreneurship and Growth
More informationEmpirical Study on Non Performing Assets of Bank Dr. Sonia Narula 1 ASSISTANT PROFESSOR DAV CENTENARY COLLEGE Faridabad - India
Volume 2, Issue 1, January 2014 International Journal of Advance Research in Computer Science and Management Studies Research Paper Available online at: www.ijarcsms.com ISSN: 2321-7782 (Online) Empirical
More informationCHAPTER II The Credit Guarantee Mechanism and its status in India
CHAPTER II The Credit Guarantee Mechanism and its status in India 2.1 Credit Guarantee Scheme Globally, Credit Guarantee Schemes (CGS) are seen as important instruments to facilitate achievement of national
More informationEOCNOMICS- MONEY AND CREDIT
EOCNOMICS- MONEY AND CREDIT Banks circulate the money deposited by customers in the banks by lending it out to businesses at a rate of interest as a credit, which then acts as the income of the bank....
More informationACCA F1 ACCOUNTANT IN BUSINESS
ACCA F1 ACCOUNTANT IN BUSINESS FOR CBE EXAMS FROM 1 SEP AUGUST 2018 ACCOUNTING AND FINANCE FUNCTION WITHIN BUSSINESS Compiled By Mr. Previlledge Mhlanga (PGM) Updated By Mr. Suleman (AGlobalWall.Com) ACCA
More informationAN ANALYSIS OF PRODUCTIVITY OF SCHEDULED COMMERCIAL BANKS IN INDIA. Ms. PRASANNA PRAKASH, SR. ASST PROF DEPARTMENT OF COMMERCE & MANAGEMENT
International Journal of Engineering & Scientific Research Vol. 6 Issue 3, March 2018, ISSN: 2347-6532 Impact Factor: 6.660 Journal Homepage: Double-Blind Peer Reviewed Refereed Open Access International
More informationThe competitiveness of modern banking calls for speedy decisions. This is all the more important in the appraisal, sanction, documentation, Equitable mortgage, disbursal and post sanction management of
More informationA Fresh Perspective on Asset Based Lending
1 Miles White Paper A Fresh Perspective on Asset Based Lending 2 Miles White Paper While asset-based lending may often be considered last-resort funding, commercial borrowers of all types and sizes are
More informationASSET AND LIABILITY MANAGEMENT IN BANKS A COMPARATIVE STUDY ON GAP ANALYSIS OF SCBs IN INDIA
ASSET AND LIABILITY MANAGEMENT IN BANKS A COMPARATIVE STUDY ON GAP ANALYSIS OF SCBs IN INDIA S. Prabhakar 1, Dr. S. Mathivannan 2, J. Ashok kumar 3 1, 3 Ph.D. Research Scholar, 2 Associate Professor and
More informationCredit Evaluation. Assessment of borrower capacity to repay the loan. Assessment of borrower s ability to bring in profits from operations.
Credit Evaluation Credit Evaluation Assessment of borrower capacity to repay the loan. Assessment of borrower s ability to bring in profits from operations. Assessment of project viability. Assessment
More informationINTERNAL RECONSTRUCTION
CHAPTER-4 Q. 1. Green Limited had decided to reconstruct the Balance Sheet since it has accumulated huge losses. The following is the summarized Balance Sheet of the Company on 31.3.2012 before reconstruction
More informationFRAMEWORK FOR REVIVAL AND REHABILITATION OF MICRO, SMALL AND MEDIUM ENTERPRISES
FRAMEWORK FOR REVIVAL AND REHABILITATION OF MICRO, SMALL AND MEDIUM ENTERPRISES A) Objective Timely detection of stress is critical for any enterprise, as any delay in action may impinge on the revival
More informationTO STUDY ON LONG TERM FINANCING BY BANKS
TO STUDY ON LONG TERM FINANCING BY BANKS Miss. Lakde Sheetal Deobaji Research scholar, School of Commerce and Mgt. Science S.R.T.M.University Nanded. (MS) ABSTRACT A term loan is a loan from bank for a
More informationInternational Journal of Current Research and Modern Education (IJCRME) ISSN (Online): ( Volume I, Issue I, 2016 A
A COMPARATIVE STUDY ON NON PERFORMING ASSET MANAGEMENT OF SELECTED PUBLIC SECTOR BANK AND PRIVATE SECTOR BANK Harish Shetty* & S. N. Sandesha** Assistant professor, SDM College, Ujire, Karnataka Abstract:
More informationIssues in Audit and Tax Audit of Banks
SPECIAL STORY Financial Services Sector : Part-I (Banks and Mutual Funds) CA Sarvesh Warty Issues in Audit and Tax Audit of Banks Banking in India is dominated by nationalised banks who account for around
More informationARTICLE ON PROJECT FINANCING
ARTICLE ON PROJECT FINANCING 1. INTRODUCTION Project financing means arranging funds for implementing a new project or undertaking expansion, diversification, modernization or rehabilitation of existing
More informationTime allowed : 3 hours Maximum marks : 100. Total number of questions : 8 Total number of printed pages : 12
: 1 : 222 Roll No... Time allowed : 3 hours Maximum marks : 100 Total number of questions : 8 Total number of printed pages : 12 NOTE : All working notes should be shown distinctly. PART A (Answer Question
More informationOrientation Programme on Credit linked Capital Subsidy Scheme
Orientation Programme on Credit linked Capital Subsidy Scheme Presentation by Shri N.K.Narula,Dy General Manager SIDBI, HYDERABAD MISSION of SIDBI To empower the Micro, Small and Medium Enterprises (MSME)
More informationSEMINAR ON INTERNAL AUDIT IN BFSI. February 9, 2013
SEMINAR ON INTERNAL AUDIT IN BFSI February 9, 2013 AGENDA Background Regulator and Regulatory framework Guidelines for Internal Audit Functions of a Bank What we do different Future trends AGENDA Background
More informationBSE SME Exchange - Presentation
Bombay Stock Exchange Ltd. Bombay Stock Exchange Limited BSE SME Exchange - Presentation 6 th Feb 2012 About SME Industry About SME Industry Classification of Micro, Small and Medium Enterprises 3 About
More informationPriority sector advances of Jammu and Kashmir Bank
Priority sector advances of Jammu and Kashmir Bank 5. Ajaz Ahmad Dass* & Tariq Ahmad Malik** *Research Scholar,RTMNU Nagpur (Maharashtra), India **Research Scholar, Jiwaji University (MP), India Abstract
More informationPerformance Analysis: A Study Of Public Sector &Private Sector Banks In India Gurpreet Kaur 1
Performance Analysis: A Study Of Public Sector &Private Sector Banks In India Gurpreet Kaur 1 Abstract A better performance in terms of Efficiency and profitability of banking sector is must for a flourishing
More informationThe Branch does not have any interest in insurance entities.
Basel II Pillar 3 disclosures Background The disclosures and analysis provided herein below are in respect of the Mumbai branch ( the Bank ) of Credit Suisse AG which is incorporated in Switzerland with
More informationb) Relationship between the Hypotheses and the Conclusions
Chapter 10 Findings and Conclusions 10.1 Introduction 10.2 Findings of the study a) General Findings b) Specific Findings c) Objective-wise Findings 10.3 Conclusions of the study a) General Conclusion
More informationNON PERFORMING ASSETS: A COMPARATIVE STUDY ON STATE BANK OF INDIA AND PUNJAB NATIONAL BANK
NON PERFORMING ASSETS: A COMPARATIVE STUDY ON STATE BANK OF INDIA AND PUNJAB NATIONAL BANK SHIVANI VAID Assistant Professor, Department of Commerce, St. Bede s College, Shimla, Himachal Pradesh ABSTRACT
More informationRATING METHODOLOGY SME. Rating Methodology SME
Rating Methodology S M E CREDIT RATING INFORMATION & SERVICES LIMITED N ak s h i H om es ( 4 th & 5 th F l oor), 6/ 1A, S egu nbagi c h a, D h ak a 1 00 0, B an gl a d e sh Tel : 7 1 7 3 70 0 1, F a x:
More informationFINANCIAL PERFORMANCE ANALYSIS OF SELECT CEMENT COMPANIES
FINANCIAL PERFORMANCE ANALYSIS OF SELECT CEMENT COMPANIES DR. A.Y. KETTIRAMALINGAM 1 K.SOWMIYA 2 P.SANGEETHA 3 1 Associate Professor, School of Commerce PG, Rathnavel Subramaniam College of Arts & Science
More informationRaising Funds from the Capital Market: Challenges for the Private Sector
Raising Funds from the Capital Market: Challenges for the Private Sector R H Patil In this Perspectives piece, R H Patil, a specialist on capital markets and stock exchanges, analyses the challenging task
More informationBASEL III AND STRENGTHENING OF INDIAN BANKING SECTOR
Indian Journal of Accounting (IJA) 115 ISSN : 0972-1479 (Print) 2395-6127 (Online) Vol. XLIX (2), December, 2017, pp. 115-120 BASEL III AND STRENGTHENING OF INDIAN BANKING SECTOR Vijila.V Dr. G. Raju ABSTRACT
More informationIII B.com(CS) [ ] Semester VI Core: Corporate Finance -605B Multiple Choice Questions.
Dr.G.R.Damodaran College of Science (Autonomous, affiliated to the Bharathiar University, recognized by the UGC)Reaccredited at the 'A' Grade Level by the NAAC and ISO 9001:2008 Certified CRISL rated 'A'
More informationCONTENTS Page 1. Introduction 1 2. Scope of Application 1 3. Capital Capital Structure Capital Adequacy 5 4. Information Related to the
CONTENTS Page 1. Introduction 1 2. Scope of Application 1 3. Capital 2 3.1 Capital Structure 2 3.2 Capital Adequacy 5 4. Information Related to the Risks 11 4.1 Credit Risk 11 4.1.1 Credit Risk Management
More informationRisk spectrum of financial assets held by banks and NBFCs
Risk spectrum of financial assets held by banks and NBFCs Analytical contact: Sreenivasa Prasanna Head Rating Criteria & Product Development Tel.: (+91 22) 6691 3173 Email: sprasanna@crisil.com Vijay Agrawal
More informationSuggested Answer_Syl2012_Dec2014_Paper_20 FINAL EXAMINATION
FINAL EXAMINATION GROUP IV (SYLLABUS 2012) SUGGESTED ANSWERS TO QUESTIONS DECEMBER 2014 Paper- 20 : FINANCIAL ANALYSIS & BUSINESS VALUATION Time Allowed : 3 Hours Full Marks : 100 The figures in the margin
More informationEvaluating risks in securitisation transactions: A primer. September 2018
Evaluating risks in securitisation transactions: A primer September 2018 Criteria contacts Somasekhar Vemuri Senior Director Rating Criteria and Product Development Email: somasekhar.vemuri@crisil.com
More informationSIDBI s Initiatives in. Sustainable Finance WE EMPOWER MSME
SIDBI s Initiatives in Sustainable Finance 1 An overview of Indian MSME MSME Sector Contribution to Indian Economy 8% of GDP of the country 45% of manufactured output 40% share in exports More than 8000
More informationCompany Accounts, Cost & Management Accounting 262 PART A
Company Accounts, Cost & Management Accounting 262 : 1 : RollNo... Time allowed : 3 hours Maximum marks : 100 Total number of questions : 8 Total number of printed pages : 11 NOTE : All working notes should
More informationAn Analysis of Growth of MSMEs in India and Their contribution in Employment and GDP of the Country
International Journal of Interdisciplinary and Multidisciplinary Studies (IJIMS), 2017, Vol 4, No.2,187-191. 187 Available online at http://www.ijims.com ISSN - (Print): 2519 7908 ; ISSN - (Electronic):
More informationRating Criteria For Small and Medium Enterprises
Rating Criteria For Small and Medium Enterprises Background SME (Small and Medium Enterprises) segment plays a very vital role in the economic development of our nation. Credit risk assessment in this
More informationAn Empirical Analysis and Comparative Study of Liquidity Ratios and Asset-Liability Management of Banks Operating in India
An Empirical Analysis and Comparative Study of Liquidity Ratios and Asset-Liability Management of Banks Operating in India Amit Kumar Meena, Joydip Dhar Abstract This paper is focused on the analysis and
More information